Newspaper article THE JOURNAL RECORD

Oklahoma Natural Gas Proposes Rate Plan Based on Return

Newspaper article THE JOURNAL RECORD

Oklahoma Natural Gas Proposes Rate Plan Based on Return

Article excerpt

Energy efficiency: an initiative heralded as a good thing everywhere except the finance office of a public utility operating under the traditional rate structure. When customers use less natural gas to heat their energy-efficient homes, Oklahoma Natural Gas loses money.

Under a proposal submitted to the Oklahoma Corporation Commission, ONG would be able to maintain a relatively level return on equity even as consumption declines. But industrial consumers are concerned the proposal would give the company too high a return at a time when businesses are struggling.

ONG officials and staff members of the commission's Public Utility Division agreed on a plan and jointly made an application to the Oklahoma Corporation Commission for a special funding mechanism known as a Performance Based Rate Change tariff.

The plan would allow ONG to adjust rates as often as needed to maintain a return on equity of 10.75 percent for the year. Rates could be increased when the earned return on equity dips below 10.25 percent, and customers would receive a credit if the company's return exceeds 11.25 percent. The commission would perform an annual review to make sure the utility's profits are in line with the established guidelines.

Don Sherry, spokesman for ONG, said the proposed funding mechanism would be good for customers because it would prevent huge increases in monthly bills that result when a traditional rate request is granted.

"Historically, several years will pass between rate cases, and the accumulated costs can amount to millions of dollars," said Sherry. "When increases are approved incrementally, the so-called 'sticker shock' is less."

The commission previously approved a similar mechanism for CenterPoint Energy, in keeping with the commission's efforts to provide incentives for utilities to encourage energy conservation. The proposed tariff would allow ONG to maintain a level of profitability even as customers reduce demand. The effort mirrors changes made by regulatory bodies nationwide, highlighted by the American Gas Association and the Natural Resources Defense Council as ways to encourage utilities to encourage their customers to conserve. …

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